IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v17y2024i9p392-d1471121.html
   My bibliography  Save this article

Corporate Social Responsibility and the Misclassification of Income Statement Items during the Coronavirus Pandemic

Author

Listed:
  • Zakeya Sanad

    (Accounting, Finance and Banking Department, Ahlia University, Manama P.O. Box 10878, Bahrain)

  • Hidaya Al Lawati

    (Accounting Department, College of Economics and Political Science, Sultan Qaboos University, P.O. Box 50, Muscat 123, Oman)

  • Abdalmuttaleb Al-Sartawi

    (Accounting, Finance and Banking Department, Ahlia University, Manama P.O. Box 10878, Bahrain)

Abstract

The purpose of this study was to examine the relationship between corporate social responsibility (CSR) and earnings management in Gulf Cooperation Council (GCC)-listed companies. It specifically addresses the question of whether companies that practice greater corporate social responsibility are less likely to engage in earnings management practices. The study sample consisted of 300 firms listed between 2015 and 2021 on GCC bourses (Saudi Arabia, United Arab Emirates, Bahrain, Qatar, Oman, and Kuwait). In this study, we developed multiple linear regression models and collected data from the Bloomberg database, Refinitiv, annual reports, official firms’ websites, and the GCC’s bourse websites for the period from 2015 to 2021. In the pre-pandemic period, firms that engaged in corporate social responsibility activities were more likely to have fewer classification-shifting practices. During the pandemic era, however, this relationship became significantly positive, suggesting that firms’ corporate social responsibility practices may be used to hide their opportunistic classification-shifting practices during difficult times, such as a pandemic. This paper presents a thorough investigation of how businesses may alter their behavior toward increasingly applied but understudied earnings management strategies and CSR practices during a difficult period such as a pandemic.

Suggested Citation

  • Zakeya Sanad & Hidaya Al Lawati & Abdalmuttaleb Al-Sartawi, 2024. "Corporate Social Responsibility and the Misclassification of Income Statement Items during the Coronavirus Pandemic," JRFM, MDPI, vol. 17(9), pages 1-18, September.
  • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:9:p:392-:d:1471121
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/17/9/392/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/1911-8074/17/9/392/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gull, Ammar Ali & Nekhili, Mehdi & Nagati, Haithem & Chtioui, Tawhid, 2018. "Beyond gender diversity: How specific attributes of female directors affect earnings management," The British Accounting Review, Elsevier, vol. 50(3), pages 255-274.
    2. Poonawala, Sakina H. & Nagar, Neerav, 2019. "Gross profit manipulation through classification shifting," Journal of Business Research, Elsevier, vol. 94(C), pages 81-88.
    3. John L. Abernathy & Brooke Beyer & Eric T. Rapley, 2014. "Earnings Management Constraints and Classification Shifting," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 41(5-6), pages 600-626, June.
    4. Mohammad Badrul Muttakin & Arifur Khan & Mohammad I Azim, 2015. "Corporate social responsibility disclosures and earnings quality: Are they a reflection of managers’ opportunistic behavior?," Managerial Auditing Journal, Emerald Group Publishing, vol. 30(3), pages 277-298, March.
    5. Carracedo, Patricia & Puertas, Rosa & Marti, Luisa, 2021. "Research lines on the impact of the COVID-19 pandemic on business. A text mining analysis," Journal of Business Research, Elsevier, vol. 132(C), pages 586-593.
    6. repec:hal:journl:hal-02312045 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Manish Bansal, 2024. "Unpacking the drivers of earnings management in CSR firms: influence of investor risk perception," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(1), pages 127-142, March.
    2. Bansal, Manish & Kumar, Ashish & Bhattacharyya, Asit & Bashir, Hajam Abid, 2023. "Predictors of revenue shifting and expense shifting: Evidence from an emerging economy," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(1).
    3. Benkraiem, Ramzi & Boubaker, Sabri & Brinette, Souad & Khemiri, Sabrina, 2021. "Board feminization and innovation through corporate venture capital investments: The moderating effects of independence and management skills," Technological Forecasting and Social Change, Elsevier, vol. 163(C).
    4. Ali Zackery & Joseph Amankwah-Amoah & Zahra Heidari Darani & Shiva Ghasemi, 2022. "COVID-19 Research in Business and Management: A Review and Future Research Agenda," Sustainability, MDPI, vol. 14(16), pages 1-32, August.
    5. Nagar, Neerav & Sen, Kaustav, 2016. "Earnings management in India: Managers’ fixation on operating profits," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 26(C), pages 1-12.
    6. Xing, Lu & Gonzalez, Angelica & Sila, Vathunyoo, 2021. "Does cooperation among women enhance or impede firm performance?," The British Accounting Review, Elsevier, vol. 53(4).
    7. Haeyoung Shin & Michael Lacina & Shanshan Pan, 2024. "The order in a series of continuous special items and the likelihood of income classification shifting," Review of Quantitative Finance and Accounting, Springer, vol. 63(3), pages 829-862, October.
    8. Alaa Mansour Zalata & Collins Ntim & Ahmed Aboud & Ernest Gyapong, 2019. "Female CEOs and Core Earnings Quality: New Evidence on the Ethics Versus Risk-Aversion Puzzle," Journal of Business Ethics, Springer, vol. 160(2), pages 515-534, December.
    9. Wang, Xu & Deng, Shengliang & Alon, Ilan, 2021. "Women executives and financing pecking order of GEM-listed companies: Moderating roles of social capital and regional institutional environment," Journal of Business Research, Elsevier, vol. 136(C), pages 466-478.
    10. Salinas Fernández, José Antonio & Guaita Martínez, José Manuel & Martín Martín, José María, 2022. "An analysis of the competitiveness of the tourism industry in a context of economic recovery following the COVID19 pandemic," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    11. Mehdi Nekhili & Fahim Javed & Haithem Nagati, 2022. "Audit Partner Gender, Leadership and Ethics: The Case of Earnings Management," Journal of Business Ethics, Springer, vol. 177(2), pages 233-260, May.
    12. Haroon ur Rashid Khan & Waqas Bin Khidmat & Muhammad Danish Habib & Sadia Awan, 2022. "Academic directors in board and corporate expropriation: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(2), pages 372-397, March.
    13. Carnes, Christina Matz & Cavanaugh, Jeffrey & David, Parthiban & O'Brien, Jonathan, 2023. "Cash creates value for supply chain systems, but who appropriates that value?," Journal of Business Research, Elsevier, vol. 161(C).
    14. Gull, Ammar Ali & Ahsan, Tanveer & Qureshi, Muhammad Azeem & Mushtaq, Rizwan, 2023. "Striving to safeguard shareholders or maintain sustainability in periods of high uncertainty: A multi-country evidence," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    15. Nair, Rajiv & Muttakin, Mohammad & Khan, Arifur & Subramaniam, Nava & Somanath, V.S., 2019. "Corporate social responsibility disclosure and financial transparency: Evidence from India," Pacific-Basin Finance Journal, Elsevier, vol. 56(C), pages 330-351.
    16. Aitzaz Ahsan Alias Sarang & Nicolas Aubert & Xavier Hollandts, 2024. "Board gender diversity and the cost of equity: What difference does gender quota legislation make?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 2193-2213, April.
    17. Manish Bansal, 2024. "Do shifting practices vary across the firm life cycle?," Australian Journal of Management, Australian School of Business, vol. 49(2), pages 142-169, May.
    18. Shahab, Yasir & Ntim, Collins G. & Ullah, Farid & Yugang, Chen & Ye, Zhiwei, 2020. "CEO power and stock price crash risk in China: Do female directors' critical mass and ownership structure matter?," International Review of Financial Analysis, Elsevier, vol. 68(C).
    19. Nguyen, Thi Hong Hanh & Ntim, Collins G. & Malagila, John K., 2020. "Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda," International Review of Financial Analysis, Elsevier, vol. 71(C).
    20. Ammar Ali Gull & Ammar Abid & Rashid Latief & Muhammad Usman, 2021. "Women on board and auditors’ assessment of the risk of material misstatement," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(4), pages 679-708, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:17:y:2024:i:9:p:392-:d:1471121. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.